Australia's new prime minister is ready to counter china

In Australian Prime Minister Scott Morrison's first landmark Pacific policy address, the newly installed PM said Australia will commit anew to the Pacific, setting up a multibillion-dollar infrastructure bank to fund projects in the region and appointing a series of new diplomatic posts.

"Australia will step up in the Pacific and take our engagement with the region to a new level," the prime minister said Nov. 8, 2018.

"While we have natural advantages in terms of history, proximity and shared values, Australia cannot take its influence in the southwest Pacific for granted, and too often we have," Morrison said.

Morrison announced new defense force mobile-training team, annual meetings of defense, police, and border security chiefs, and new diplomatic posts in a number of Pacific countries.

The centerpiece will be a $2 billion AUD financial facility to help fund major regional projects while the existing export financing agency (EFA) will be boosted by another one billion dollars.

Referring to Australia's 2017 Foreign Policy White Paper, Morrison said the stability and economic progress of the Pacific region are of "fundamental importance," and no single country can tackle the challenges on its own.

Chinese President Xi Jinping

(Photo by Michel Temer)

Morrison announced his Pacific Pivot ahead of a milestone meeting with Chinese President Xi Jinping and other Asia-Pacific regional leaders next week at the APEC forum in Papua New Guinea.

Morrison said it was time Australia opened a "new chapter in relations with our Pacific family." "Australia has an abiding interest in a Southwest Pacific that is secure strategically, stable economically, and sovereign politically."

A familiar tone

In a speech that strongly echoed former US President Barack Obama's "Asian Pivot" address in Canberra in 2011, Morrison outlined his own plan to project Australian soft power in an attempt to thwart China's unchecked economic and industrial expansion across the Pacific over the last decade.

In a pretty unforgettable speech to Australia's parliament on Nov. 17, 2011, Obama declared that "America is back!" "Let there be no doubt: in the Asia-Pacific in the 21st century, the United States of America is all-in."

That was about the zenith of the much-vaunted pivot, and at around exactly the same time China started to take its interests in the Pacific to a fresh intensity.

According to Reuters' calculations, since Obama's "Asia Pivot," China has poured $1.3 billion in concessionary loans and gifts to almost instantly become the Pacific's second-largest donor after Australia.

Falling under Beijing's influence

Today, China is the region's biggest bilateral lender, although Australia's significant aid programs mean it remains the largest financial backer in the South Pacific.

While China has always maintained a political stake in the region as part of its ongoing diplomatic chess battle with Taiwan, the sheer magnitude and speed of Chinese assistance eventually raised alarms and even hysteria among Western-aligned nations that the string of southern Pacific island states was very quickly falling under Beijing's influence.

But if Australia's backyard was finding itself over a Beijing barrel, then Morrison put his hand up for the first time to acknowledge that Australia and its major allies, the US foremost amongst them, wore some of the blame for that and had neglected the region for too long.

Australia, he said, had taken the Pacific and its nations "for granted." Speaking from a military facility in Townsville where US troops are based, Morrison redrew the Pacific's strategic importance to Australia's foreign and defense policy.

Morrison promised closer economic, military and diplomatic ties in what will undoubtedly be seen from Beijing as a move to counter its efforts to drive its controversial One Belt, One Road initiative or in this case its 21st-century maritime silk road.

One Belt, One Road initiative. China in red, Members of the AIIB in orange, the six corridors in black.

Fortunately, Beijing won't even have to pick up the phone with Morrison's Foreign Minister Marise Payne already in Beijing heading up Australia's first mission to China in several years after an extended diplomatic freeze out. "This is not just our region, or our neighborhood.

It's our home," Morrison said. Morrison flagged that the region requires around $4 billion per year in investments up to 2030, adding, "It's where Australia can make the biggest difference in world affairs."But that is something China has been more than happy to help achieve.

In the ten years between 2006 and 2016, The Lowy Institute a Sydney-based think tank, reckons Beijing has probably injected more than $2.3 billion into the region.

China has been more than happy to accommodate small nations such as Vanuatu, Tonga and the Solomon Islands with concessional loans, criticized by many as overt "debt-trap diplomacy."

Colombo's failure to get on top of $6 billion in debt repayments to Beijing's state-owned enterprises has already given Beijing what many analysts consider a critically handy strategic toehold in Sri Lanka, in the port of Hambantota, including a 99-year-lease.

The port has idyllic views of the major Indian Ocean sea lanes. Elsewhere China is copping its first significant OBOR pushback out of the Asia-Pacific.

Malaysia is trying to find itself some wriggle room, preferably around perceived inequalities in the huge $23 billion of China-originated infrastructure deals Kuala Lumpur has signed off on. Part of Australia's appeal to the Pacific will be in aid and funding transfers that have traditionally not been about incurring trade deficits or weighty balance of payments crisis.

However, academics including James Laurenceson, deputy director of the Australia China Research Institute say that analysis of debt in the Pacific strongly suggests that the "debt-trap diplomacy" argument is without much foundation.

What is certain, however, is that over and above China's bilateral aid programs across the pacific and its support for regional organisations, Beijing has been at pains to show it is a partner in good faith.

Beijing has backed and hosted major regional meetings, most recently in 2013, in which it announced a suite of aid measures to boost economic resilience and diplomatic engagement, while also providing strong support to regional organisations, most particularly the Pacific Islands Forum.

Prime Minister Scott Morrison.

China has provided generous scholarship programs for Pacific islands students and contributes significant human resources and training for pacific island government officials.

Johnny Koanapo Rasou, Vanuatu's Member of Parliament for Tanna Constituency, where China has been delivering badly needed road works and infrastructure, said in a press statement in 2017 that Vanuatu had its eyes wide open as China's assistance becomes more and more evident.

"Our people are now learning more about China's capability to positively contribute to our development aspirations." "The manner in which the Chinese Government is delivering their aid to Vanuatu is different from the styles we are used to from New Zealand or Australia.

"But we must accept that all our development partners have different state structures. China is a communist state but it has created an enabling environment for its own citizens to flourish and therefore they themselves can go out and invest in other countries."

League of debtor nations

However, according to Thomson Reuters almost half (49.08%) of Vanuatu's external debt belongs to China. In August 2018, Tongan Prime Minister 'Akilisi Pōhiva said he hoped Pacific states could negotiate together to find a way out from under Beijing's loans, before Tonga began to lose control of state assets as was happening in Sri Lanka.

Chinese loans make up more than 60% of Tonga's total external debt burden. Another focus for Beijing has been the variety of resources available in loosely governed Papua New Guinea, which lays claim to the biggest Chinese debt, nigh on $590 million.

New Guinea, Tonga, and Vanuatu all receive military aid from China. Fiji's military leaders in particular have been welcoming of Chinese economic, military and strategic assistance.

China's state media Xinhua has a quiet, but impactful bureau in Suva. While the US and its allies have been distracted with conflicts in the Middle East, China stepped up its military activities in the South Pacific. Chinese companies have sought and often secured access to strategic ports and airfields across many regional archipelagos.

According to Anne-Marie Brady, a political scientist from Canterbury University, satellite interests are an important aspect to China's surge into the South Pacific. "In 2018, China launched 18 BeiDou-3 satellites into space.

Beidou-3 is China's indigenous GPS, it provides missile positioning and timing and enhanced C4ISR capabilities for the Chinese military, as well as navigation services to more than 60 countries along the Belt and Road, including in Oceania.

Professor Brady said China's mobile satellite station receiving station vessels regularly dock in Papeete (Tahiti) and Suva (Fiji), as do other quasi-military boats such as the Peace Ark and China's well-equipped polar research vessels.

Brady a leading expert on Chinese investment in then pacific said many Pacific leaders now acknowledged China as "the dominant power in the region."

"China's strategic and military interests in the South Pacific build on longstanding links and fill the vacuum left by receding US and French power projection in the region, as well as Australia and New Zealand's neglect of key relationships in the region."

This article originally appeared on Business Insider. Follow @BusinessInsider on Twitter.